EL PASO COUNTY, COLORADO FEDERAL AWARDS REPORTS IN ACCORDANCE WITH THE SINGLE AUDIT ACT AND OMB CIRCULAR A-133 DECEMBER 31, 2013

Transcription

1 FEDERAL AWARDS REPORTS IN ACCORDANCE WITH THE SINGLE AUDIT ACT AND OMB CIRCULAR A-133 DECEMBER 31, 2013

2 Contents Page Independent Auditors Report On Internal Control Over Financial Reporting And On Compliance And Other Matters Based On An Audit Of Financial Statements Performed In Accordance With Government Auditing Standards Independent Auditors Report On Compliance For Each Major Federal Program, Report On Internal Control Over Compliance And Report On The Schedule Of Expenditures Of Federal Awards Required By OMB Circular A Schedule Of Expenditures Of Federal Awards Schedule Of Findings And Questioned Costs

3 RubinBrown LLP Certified Public Accountants & Business Consultants th Street Suite 300 Denver, CO Independent Auditors Report On Internal Control Over Financial Reporting And On Compliance And Other Matters Based On An Audit Of Financial Statements Performed In Accordance With Government Auditing Standards T F W rubinbrown.com E info@rubinbrown.com Board of County Commissioners El Paso County Colorado Springs, Colorado We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining fund information of El Paso County, Colorado (the County), as of and for the year ended December 31, 2013, and the related notes to the financial statements, which collectively comprise the County s basic financial statements, and have issued our report thereon dated July 29, Our report includes a reference to other auditors who audited the financial statements of the El Paso County Retirement Plan and the El Paso County Housing Authority, as described in our report on the County s financial statements. The financial statements of the El Paso County Retirement Plan and the El Paso County Housing Authority were not audited in accordance with Government Auditing Standards, and accordingly, this report does not include reporting on internal control over financial reporting or instances of reportable noncompliance associated with it. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the County s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County s internal control. Accordingly, we do not express an opinion on the effectiveness of the County s internal control.

4 Board of County Commissioners El Paso County, Colorado A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance And Other Matters As part of obtaining reasonable assurance about whether the County s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose Of This Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. July 29, 2014 Page 2

5 RubinBrown LLP Certified Public Accountants & Business Consultants th Street Suite 300 Denver, CO T F Independent Auditors Report On Compliance For Each Major Federal Program, Report On Internal Control Over Compliance And Report On The Schedule Of Expenditures Of Federal Awards Required By OMB Circular A-133 W rubinbrown.com E info@rubinbrown.com Board of County Commissioners El Paso County Colorado Springs, Colorado Report On Compliance For Each Major Federal Program We have audited El Paso County, Colorado s (the County), compliance with the types of compliance requirements described in the Office of Management and Budget (OMB) OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the County s major federal programs for the year ended December 31, The County s major federal programs are identified in the summary of auditors results section of the accompanying schedule of findings and questioned costs. The County s basic financial statements include the operations of El Paso County Public Health, a discretely presented component unit, which received $14,620,645 in federal awards and is not included in the County s schedule of expenditures of federal awards for the year ended December 31, Our audit, as described below, did not include the El Paso County Public Health operations because we performed the audit in accordance with OMB Circular A-133 and issued separate reports regarding those operations. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts and grants applicable to its federal programs.

6 Board of County Commissioners El Paso County, Colorado Auditors Responsibility Our responsibility is to express an opinion on compliance for each of the County s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the County s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the County s compliance. Opinion On Each Major Federal Program In our opinion, the County complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, Report On Internal Control Over Compliance Management of the County is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the County s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the County s internal control over compliance. Page 4

7 Board of County Commissioners El Paso County, Colorado A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies, and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, we identified certain deficiencies in internal control over compliance, as described in the accompanying schedule of findings and questioned costs as items and , that we consider to be significant deficiencies. The County s response to the internal control over compliance findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The County s response was not subjected to the auditing procedures applied in the audit of compliance, and accordingly, we express no opinion on the response. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. Page 5

8 Board of County Commissioners El Paso County, Colorado Report On Schedule Of Expenditures Of Federal Awards Required By OMB Circular A-133 We have audited the financial statements of the County as of and for the year ended December 31, 2013, and have issued our report thereon dated July 29, 2014, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. July 29, 2014 Page 6

9 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For The Year Ended December 31, 2013 Page 1 Of 3 Federal Grantor/Pass-Through Grantor/ Program Or Cluster Title Grantor s Federal Identification CFDA Federal Number Number Expenditures U.S. Department Of Agriculture Passed through Colorado Department of Human Services SNAP Cluster State Administrative Matching Grants for the Supplemental Nutrition F13WKFARE $ 320,937 Program - Colorado Workfare Program State Administrative Matching Grants for the Supplemental Nutrition ,586,371 Program State Administrative Matching Grants for the Supplemental Nutrition ,546 Program Subtotal - SNAP Cluster 4,004,854 Passed through Colorado Department of Local Affairs Forest Service School and Road Cluster Schools and Roads - Grants to States ,455 Subtotal - Forest Service and Road Cluster 33,455 Passed through Colorado Department of Public Safety Emergency Watershed Protection Program - NRCS 68-8B05-A ,230 Emergency Watershed Protection Program - NRCS 68-8B05-A ,850 Subtotal 846,080 Total U.S. Department Of Agriculture 4,884,389 U.S. Department Of Housing And Urban Development CDBG - Grants Entitlement Cluster Community Development Block Grant 13UC ,345 Total U.S. Department Of Housing And Urban Development 428,345 U.S. Department Of Justice JAG Program Cluster Justice Assistance Grant(JAG)2009 ARRA ,497 Passed through the Colorado Springs Police Department Justice Assistance Grant(JAG)2013 DIRECT 2012DJBX ,448 Justice Assistance Grant(JAG) FY 2012 DIRECT 2011DJBX ,263 Subtotal - JAG Program Cluster 68,711 State Criminal Alien Assistance Program (SCAAP) FY ,266 Passed through Colorado Springs Police Department Project Safe Neighborhood Cluster Project Safe Neighborhood FY GP-BX ,604 Subtotal Project Safe Neighborhood Cluster 6,604 Passed through Colorado Department of Public Safety Crime Victim Assistance 13VA ,569 Total U.S. Department Of Justice 238,647 Page 7

10 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For The Year Ended December 31, 2013 Page 2 Of 3 Grantor s Federal Federal Grantor/Pass-Through Grantor/ Identification CFDA Federal Program Or Cluster Title Number Number Expenditures U.S. Department Of Labor Passed through Colorado Department of Labor and Employment Employment Service Cluster Wagner-Peyser Employment Services 1030,1118,1139, $ 1,314,190 Wagner-Peyser - Summer Job Hunt 1030,11818,1139, ,000 Disabled Veterans ,417 Local Veterans Employment ,608 Subtotal Employment Service Cluster 1,422,215 WIA Cluster Workforce Investment Act Title I Adult Program 870,984,1026,1027,1170, ,852,483 Workforce Investment Act Title I Youth Activities 872,1026,1028,1170, ,724,243 Workforce Investment Act - Dislocated Worker Program 800,815,873,911, ,952 Workforce Investment Act Title I Enhanced DW Program ,700 Workforce Investment Act - Dislocated Worker DXLT ,042 Workforce Investment Act - Dislocated Worker Program DXRE ,530 Workforce Investment Act - Engaging Youth ,159 Workforce Investment Act - Hospitality ,271 Subtotal WIA Cluster 4,759,380 Workforce Investment Act Unemployment Insurance ,487 Trade Adjustment Assistance ,428 H1B ,590 NEG ,455 Veterans' Workforce Employment Program (VWIP) ,747 Total U.S. Department Of Labor 7,273,302 U.S. Department Of Transportation Passed through Colorado Department of Transportation Highway Planning and Construction Cluster Colorado Avenue Project NH C ,700 Oil Well Road Bridge Replacement BRO C ,328 Berridge Road Bridge BRO C South Academy Bike and Pedestrian Trail STE M ,716 Recreational Trails Program ,855 Total U.S. Department Of Transportation 407,409 U.S. Department Of Health And Human Services Passed through Colorado Department of Human Services TANF Cluster Temporary Assistance for Needy Families TANF ,085,859 Subtotal TANF Cluster 17,085,859 Page 8

11 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For The Year Ended December 31, 2013 Page 3 Of 3 Federal Grantor/Pass-Through Grantor/ Program Or Cluster Title Grantor s Federal Identification CFDA Federal Number Number Expenditures U. S. Department Of Health And Human Services Passed through Colorado Department of Human Services CCDF Cluster Child Care and Development Block Grant $ (3,118) Child Care Mandatory and Matching Funds of the Child Care Development Fund ,639,748 Subtotal CCDF Cluster 6,636,630 Medicaid Cluster Title XIX/Medicaid ,870,302 Subtotal Medicaid Cluster 1,870,302 Adjustment to Federal Assistance 93.xxx (14,454) Guardianship Assistance Promoting Safe & Stable Families B 0501C000FP ,298 Title IV-D Administration ,898,020 Child Support Enforcement Research ,742 Low-Income Home Energy Assistance (LEAP) ,839,093 Title IV-B ,761 Social Services Research and Development ,710 Pieces Grant ,981 Title IV-E ,474,796 Adoption Assistance ,851,565 Social Services Block Grant Title XX ,440,813 Title IV-E (Independent Living) ,191 Passed through Colorado Department of Local Affairs Community Service Block Grant L6CSBG ,207 Passed through Aspen Pointe Block Grant for Prevention and Treatment of Substance Abuse ,800 Total U.S. Department Of Health And Human Services 46,527,040 White House Office Of National Drug Control Policy (ONDCP) Rocky Mountain High Intensity Drug Trafficking Area - HIDTA ,187 Department Of Homeland Security Passed through Colorado Department of Public Safety Disaster Grants - Public Assistance (Presidentially Declared) 14-D4134-EP ,037 Disaster Grants - Public Assistance (Presidentially Declared) 14-E ,677 Disaster Grants - Public Assistance (Presidentially Declared) 14-D ,587 Emergency Management Preparedness Grant ,514 Flood Inundation Study 12MAP13EP ,000 Fire Management Assistance Grant ,536 Total Department of Homeland Security 672,351 Total Of Federal Awards $ 60,951,670 The following notes are an integral part of this schedule. Note 1. Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of El Paso County, Colorado, and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and with the requirements of the State of Colorado Department of Human Services for reporting electronic benefit transactions. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. Note 2. Pass Through El Paso County, Colorado, passes funds to sub-recipients with the following program: Community Development Block Grant - Pass through amount is $428,345. Rocky Mountain High Intensity Drug Trafficking Area - HIDTA - Pass through amount is $520,187. Page 9

12 SCHEDULE OF FINDINGS AND QUESTIONED COSTS For The Year Ended December 31, 2013 Financial Statements Section I - Summary Of Auditors Results Type of auditors report issued: Unmodified Internal control over financial reporting: Material weakness(es) identified? yes no Significant deficiency(ies) identified? yes none reported Noncompliance material to financial statements noted? yes no Federal Awards Internal control over major programs: Material weakness(es) identified? yes no Significant deficiency(ies) identified? yes none reported Type of auditors report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of OMB Circular A-133? yes no Identification of major programs: CFDA No. Name Of Federal Program Or Cluster Employment Service/Wagner-Peyser Funded Activities Disabled Veterans Outreach Program Local Veterans Employment Representative Program WIA Adult Program WIA Youth Activities WIA Dislocated Workers Formula Grants Child Care and Development Block Grant Child Care Mandatory and Matching Funds of the Child Care and Development Fund Child Support Enforcement Medical Assistance Program Dollar threshold used to distinguish between $1,828,550 Type A and Type B programs: Auditee qualified as low-risk auditee? yes no Page 10

13 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) For The Year Ended December 31, 2013 Section II - Financial Statement Findings None. Finding Section III - Federal Award Findings And Questioned Costs CFDA WIA Adult Program CFDA WIA Youth Activities CFDA WIA Dislocated Worker Formula Grants Federal Agency: U.S. Department of Labor Pass-Through Entity: Colorado Department of Labor Criteria Or Specific Requirement: Per the Procurement, Suspension, and Debarment compliance requirement, nonfederal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred. Covered transactions include those procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other specified criteria. When a nonfederal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA), collecting a certification from the entity or adding a clause or condition to the covered transaction with that entity (2 CFR Section ). Condition: The County does not have a control in place to verify purchases with vendors in excess of $25,000 are not suspended or debarred. Only contracts that exceed $25,000 are verified on the EPLS through the County Procurement Department. Questioned Costs: Not applicable. Context: No payments were made to debarred vendors; however, program personnel were unaware of the requirement to perform debarment searches. The County Procurement Department performed the one verified debarment search as part of its contracting procedures, but program personnel did not subject vendors to contracting procedures unless individual transactions exceeded the $25,000 covered transaction threshold. Page 11

14 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) For The Year Ended December 31, 2013 Effect: The County could be out of compliance with Procurement, Contracting, and Debarment compliance requirements. Cause: There is not a control in place at the program level to identify vendors with program transactions in excess of $25,000 and to verify potential vendors are not debarred. Recommendation: We recommend program management implement internal policies to identify vendors where transactions will likely exceed $25,000 and route through the Procurement Department to ensure appropriate contracts and contract file documentation is in place. Further, we encourage program management to adopt a policy of internal verification of nondebarment for all vendors in covered transactions. Views Of Responsible Officials And Planned Corrective Action: Management agrees that additional steps need to be implemented to ensure compliance with federal standards. The County will annually review all expenditures for vendors paid over $25,000 to compare them to the debarred vendor list. Finding CFDA WIA Adult Program CFDA WIA Youth Activities CFDA WIA Dislocated Worker Formula Grants Federal Agency: U.S. Department of Labor Pass-Through Entity: Colorado Department of Labor and Employment Criteria Or Specific Requirement: OMB Circular A-133 requires an auditee to maintain internal control over federal programs that provides reasonable assurance that the auditee is managing federal awards in compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Eligibility requirements specific to each federal program specify the criteria for determining the individuals, groups of individuals or subrecipients that can participate in the program and the amounts for which they qualify. Condition: In testing controls over WIA eligibility, we found that employees either did not acquire a second signature or double-signed WIA applications, indicating that in these cases a secondary review of eligibility determinations was not performed. Page 12

15 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) For The Year Ended December 31, 2013 Questioned Costs: Not applicable. Context: Thirteen WIA applications from a sample of 40 did not contain dual signatures as required by policy. All 40 case files tested met appropriate eligibility requirements. Effect: Lack of review in the application process could lead to applicants being incorrectly accepted into the WIA program when they do not meet eligibility requirements. It could also allow eligible applicants to be accepted without complete documentation in the applicant file for future reference. Cause: The program s dual signature policy on WIA applications was not consistently applied. Recommendation: We recommend the County ensure all program staff are aware of the requirement regarding dual signatures on WIA applications. We also recommend program management perform periodic top-level reviews of controls to monitor the sufficiency and operating effectiveness of controls in place. Views Of Responsible Officials And Planned Corrective Action: Management agrees with this finding. We will adopt procedures to ensure two staff members review these eligibility determinations. At their next team meetings, adult and youth case management staff will review required intake and eligibility review procedures, including a two sets of eyes requirement for eligibility determinations. Finding Section IV - Prior-Year Findings Criteria Or Specific Requirement: Construction in progress related to several infrastructure projects was not adjusted to reflect completed projects in previous years, resulting in a significant reclassification to a depreciable capital asset category. Depreciation records are also maintained in Excel spreadsheets, and a calculation error resulted in a misstatement of recorded depreciation expense in Condition And Context: A reclassification was made between construction in progress and depreciable capital assets, and an adjustment to annual depreciation expense was made to correct the financial statements. Page 13

16 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) For The Year Ended December 31, 2013 Views Of Responsible Officials And Planned Corrective Action: Management agrees with this finding. We are continuing to review the Work In Progress category and will ensure reconciliations are done on a regular and timely basis. We are contacting departments semi-annually to get updates on their work in progress and estimated completion dates. The errors on depreciation expense actually pertained to prior years and were caught by us in 2012, so depreciation was brought up to the correct balances. This was discovered as we were moving all balances from our manual spreadsheets into our J.D. Edwards (JDE) capital asset system. Since we will be reporting from totals in JDE and not using our manual spreadsheets, we do not foresee any issues with this in the future. Auditor Response: The County performed Work In Progress reconciliations on a timely basis in No audit adjustments were required in 2013 related to Work In Progress balances or Depreciation Expense. We consider this finding resolved. Page 14